What Happens if You Don’t Pay Back a Payday Loan

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If you took out a payday loan, it was probably because you needed a quick influx of cash, perhaps to pay a bill or take care of a repair. The loan was fast and easy to get, and immediately solved a problem. The problem with payday loans is that it only takes one missed payment to immediately send a borrower into a spiral of debt. With interest rates as high as 400%, a new charge every time you extend the loan and potential subsequent fees from your bank when they make automatic withdrawals from your checking account that you can’t cover.

As unfair as these tactics may be, there is no way to make a payday loan go away.

What happens if I ignore paying back my loan?

Most likely you will see attempted withdrawals from your checking account since you gave this lender permission to do so when you originally signed up for the loan. If you cannot cover the withdrawals, your bank will charge you a Non-Sufficient Funds (NSF) fee every time your balance is insufficient, which means every time a check bounces, whether it’s for $7 or $700, you will incur a fee, generally around $37 a pop.

You, and potentially, your friends and family, will start receiving calls from collection agencies trying to recoup the amount you owe. Some may even show up in person at your home or work.

You will likely be taken to court, and if you are ruled against by a judge, depending on your state’s laws, your wages can be garnished, and your current property repossessed – or any property you acquire in the next 10 years, if the loan is not paid off in full.

Because defaulting is not a crime, you cannot be sent to jail, despite what some collectors may tell you, and some of them may get aggressive with their threats. The Fair Debt Collections Practices Act is a federal law that prohibits collection agencies from using abusive, unfair or deceptive practices to borrowers. Some of the infractions include contacting you outside the hours of 8 a.m. to 9 p.m., call you at work, verbally abusing you or calling your friends or family to collect on a loan.

If you feel you are being harassed by a collection agent, register a complaint with your state’s attorney general or the Consumer Financial Protection Bureau.

What should I do if I cannot pay my loan back

First things, first: do not ignore this situation. If defaulting seems inevitable, contact your lender before your payment date to discuss terms. If you feel that you will be unable to negotiate, take advantage of a free consultation with a loan consolidator like Real PDL Help. These professionals have years of experience and expertise in helping everyday people consolidate and negotiate their debt, reduce stress, create a budget and get out from under loan debt.

The payday loan consolidation process is simple and will put you in control. The experts will:

Work with you to establish a budget to determine what payment plan you can afford and how to get you or your family out of debt.

Get the lenders out of your bank accounts.

Contact your lenders.

Educate you one-on-one so you can have the confidence to move forward in your life.